Tax hike facing residents over Exhibition financial fiasco
By Lethbridge Herald on November 27, 2024.
City administration is recommending city council approve an additional 2.24 per cent increase in property taxes to cover the $4.1 million operational costs for the LDE in 2025.
Herald photo by Ian MartensAl Beeber – LETHBRIDGE HERALD – abeeber@lethbridgeherald.com
Al Beeber
Lethbridge Herald
The magnitude of the Lethbridge & District Exhibition financial fiasco was put into sharp focus Wednesday morning when City administration recommended that city council approve a 2.24 per cent increase in property taxes for 2025 on top of the 5.1 per cent annual hike that residents are already facing.
Chief Financial Officer Darrell Matthews told the Economic and Finance Standing Policy Committee of Lethbridge city council the increase would be used to cover the $4.1 million operational costs for the LDE in 2025.
The SPC consists of all members of council who on Dec. 10 will hear from administration which is being tasked to come back with other options.
If council approves the tax hike it would amount to an average of $60 per year for an average single-family house in Lethbridge on top of the roughly $130 per year hike residents will already see due to the annual property tax increase approved in the 2023-2026 budget by council in the fall of 2022. If council approves the additional increase, that means taxpayers will experience a total property tax hike of 7.3 per cent in 2025 or about $190 more per residence.
An average home, Matthews told mayor Blaine Hyggen Wednesday afternoon, is valued at $327,000.
Matthews said during the morning discussion the tax hike alone is preferred by Administration due to a higher financial risk of using other options including combinations of corporate budget contingency and a tax increase or the full allocation of the corporate budget contingency.
On Wednesday afternoon, the SPC approved several motions which will be presented to themselves acting as council on Dec. 10.
In the first, the SPC voted to recommend council:
i. Proceed with the development of a recommended business plan, implementation plan and budget development of a municipally controlled corporation to consolidate event attraction across Lethbridge;
ii. Work with the LDE board and provincial government on the future LDE governance model and;
iii. Explore potential new models for event attraction and partnerships to leverage un-utilized space in a way that maximizes community benefit.
2. Refer the following LDE capital considerations to the 2027-2030 Capital Improvement Program (CIP) deliberations:
i. Demolition of the old pavilions, except for West Pavilion and;
ii. LDE parking lot reconstruction project.
The SPC also voted to defer until Dec. 10. a decision to approve the 2025 to 2026 ongoing operating budget requirements for the continued operation of the LDE to the tune of $4.1 million in both 2025 and 2026 and approve the addition of four full-time employees included within the 2025-26 city operational requirements when it will hear other options from Administration..
Council is also being asked to direct administration to refinance the City loan to LDE.
The report to the SPC states that a loan of $17.3 million with annual interest of 5.11 per cent will cost taxpayers a total of $35 million by the time the loan is paid off in 30 years.
So administration is recommending that the City use a lump sum grant of $7.3 million in City grant funding to reduce the principal borrowing, allocate up to $10 million from the Municipal Revenue Sustainability Reserve and approve a 10-year internal loan of $10 million from the MRSR with funding from the Pay-As-You-Go plan based on the prevailing provincial lending rate at time of borrowing, bringing the total cost to $20 million – which would mean a savings of $15 million and a shorter loan term.
The recommendation that council is being asked to make to administration will forgive the outstanding loan receivable from LDE for the Agri-Food Hub and Trade Centre and repay the outstanding external loan balance to the province – including any penalties.
The immediate tax increase, Matthews said, aligns with a long-standing fiscal policy of council of such action which maintains the corporate budget contingency for the current budget cycle and the integrity of the multi-year budget process as well as MRSR surplus allocation for council’s ability for one-time allocations for the 2028-31 budget deliberations.
During afternoon discussion, Hyggen said he wanted the public to know the decisions facing council aren’t easy and bluntly described the decisions local governance as “an absolute struggle and it’s hell. . .there’s no rosy lining to this unfortunately at this particular time as we look at these numbers and as I’m talking about millions and millions and millions and where those dollars would come from, it’s not easy.”
In the morning session during which Matthews talked to the SPC about potential scenarios for addressing the financial situation after City manager Lloyd Brierley spoke, the words “disturbing” and “shocking” were used to describe the situation now facing the City and taxpayers after Tuesday’s release of the third party independent review of LDE operations by Deloitte Canada.
The SPC in the morning heard that continuing operations for the LDE will cost the City $4.1 million in 2025 and that future councils need to consider another $32.1 million in unfunded LDE capital projects which will limit future community projects.
City administration is also recommending council approve the hiring of four full-time employees for the Exhibition including three facility staff and one financial support staff at cost of $300,000 in 2025, $500,000 in 2026 and $800,000 in 2027.
Mathews report says that based upon City of Lethbridge standards, an annual allocation of $1,050,000 is required for the Agri-Food Hub and Trade Centre to maintain, replace or upgrade facilities – that means the City would have to increase annual funding by $794,000 annually from the $256,000 given to the LDE each year through the 2023-26 operating budget’s N-46 LDE fee for service initiative.
Matthews also addressed the demolition of the old pavilions, administration’s recommendation being to only save the West Pavilion for onsite storage by the LDE at a relatively low operating cost. The expense for this would be $100,000 per year. Another option which is to repurpose the North Pavilion for livestock and maintain the West for storage would have a capital cost of $12.5 million and annual operating expenses of $600,000 while only drawing $100,000 of revenue.
Repurposing the North Pavilion with turf for recreational use and keep the West for storage would cost $14.5 million and have an annual estimated operating expense of $700,000 while only bringing in $300,000 in revenue. With no space for spectators such a use would be for training only, says the report to SPC. It also notes the site isn’t an ideal location for a recreational facility.
In a media scrum, Mathews said if council decides not to fund the Hub, the $4.1 million annual operating cost to mothball it would drop to $2.5 million per year afterwards for security, insurance and other costs.
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Why payout the Provincial loan if there are penalties involved?
From what I heard even with the penalty there is a significant savings to be had over changing the loan from what the exhibition decided. This decision makes complete sense to me.
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This will be a continuing taxpayer boondoggle for years. I am wondering (out loud) whether any group has sat down and determined what venues the New Agri-Center is NOT compatible with?
That may sound a tad foolish but if a thinktank figured out what could not be held at the Agri-Center because of design, calculated the income from all those incompatible venues then perhaps a redesign would pay for itself and taxpayers would see some relief quicker?
Obviously considering launching a Space-X rocket from inside the Agri-Center would be incompatible with its present function so some level of reason would have to be exercised. However, the ensuing blast may solve our longterm problem?
I lay the blame for this squarely on the shoulders of City Admin and Council. Their responsibility, at the very least, was oversight. Not just taking status updates at face value. I’ll remember why I paid 2.5% more in taxes at election time !
If you read the full report on the City’s website. The lack of overnite by the City administration was one of the top concerns of the commission. As taxpayers we need to ensure that we have a government that looks after our best interests not theirs. We have had too many missteps over the last couple of years to say this was just a one off.
It was brought to my attention from a friend at coffee this morning that while the Mayor was still a Councillor, he had brought forth a motion for an oversight committee to monitor the project, but other Councillors, including Rob Miyashiro voted against that motion.
An oversight committee would have prevented the current dilemma we now find ourselves in.
This was a past Council decision, who also forced the SCS on us and defund the LPS of over $1 million on us during the highest crime rates. I would be looking at some of those still sitting on Council who continue to make bad decisions that cost all of us!
Give me a break with ur constant Rob did this or the current mayor’s proposal would have prevented this fiasco. Don’t u have No Hope signs to put up? I noticed the highway to Coutts doesn’t have any.
Good luck Say What,seriously. Following the votes takes time and research because you also need to follow the votes from the different committees before these issues go to the whole council for a vote. The herald used to record the votes in the paper. Guess who shut that down? The herald tends to back down from city hall(white house) interference.
Disregard the childish remarks from others on this thread, Say What. A vote is a fact. That is why city hall makes it harder all the time to track. If a person is uncomfortable with a recorded fact, and wants to make childish remarks about someone for merely pointing it out,that makes them part of the problem.
It’s important to recognize that municipal decisions are complex and involve multiple stakeholders. While certain council members, including Rob Miyashiro, opposed the oversight committee, attributing the current situation solely to these decisions may oversimplify the broader context.
The broader context of the Agri-food Hub & Trade Centre situation includes several intertwined factors beyond just council decisions:
1. Governance and Decision-Making
Council Oversight: The council’s rejection of Blaine Hyggen’s motion for an oversight committee reflects a governance choice that prioritized existing processes over additional monitoring. However, oversight committees can enhance transparency and accountability, which may have mitigated current issues.
Mixed Priorities: The council also faced other major decisions during the same period, such as the funding for the Supervised Consumption Site (SCS) and cuts to the Lethbridge Police Service (LPS) budget, reflecting a potentially fragmented focus on competing issues.
2. Economic and Operational Realities
Economic Conditions: Rising construction costs, inflation, and interest rate hikes during the pandemic heavily impacted project budgets. These were largely unforeseen challenges affecting many municipal projects across Canada, not just Lethbridge.
Operational Oversight: The Lethbridge & District Exhibition (LDE) appears to have struggled with financial and operational planning. The lack of early intervention or an oversight mechanism during construction amplified these issues.
3. Shifts in Administration
Mayor Chris Spearman’s Role: The project was approved and initiated under Chris Spearman’s leadership. While the plans appeared sound at the time, economic and operational mismanagement occurred after his term.
Mayor Blaine Hyggen’s Role: Blaine Hyggen inherited the project mid-construction. While he did not initiate it, his administration bears responsibility for addressing financial overruns and ensuring the project’s completion, which may create a perception of negligence or inadequate leadership.
4. Public Perception and Accountability
Community Trust: Decisions about the SCS, LPS budget cuts, and tax hikes have created tension within the community. This has fueled criticism of current and past councils for mismanagement or misplaced priorities.
Political Posturing: Accusations of “passing the blame” reflect broader dissatisfaction with perceived inefficiencies in government, especially when public funds are involved.
5. Structural Challenges in Municipal Projects
Complexity of Large-Scale Projects: Municipal projects of this scale often face unforeseen hurdles. Without proper contingency planning or governance mechanisms, small issues can snowball into larger financial and operational challenges.
Inter-Governmental Coordination: The provincial government declined further funding, citing concerns about the business plan’s viability. This rejection underscores the importance of having strong initial proposals and advocacy efforts.
Conclusion:
Blaming any single individual or decision over simplifies the complexity of the situation. The challenges arise from a combination of:
Economic shifts beyond anyone’s control.
Strategic and operational oversights by multiple parties.
Political decisions that may not have accounted for long-term repercussions.
An effective resolution would require addressing governance, improving operational oversight, and rebuilding public trust through transparency and accountability measures.
Well said. There’s no doubt some things were missed with past Council and administration but it is clear that the exhibition staff did not provide all the information. The members of council that were there then and are still here now need to learn from this and do better.
While I won’t defend past decisions, one would think you could trust the CEO and Board but clearly that was not the case! Almost all of city administration is new and have been very transparent with the public. They did not pull any punches.
To the comment below if anyone should go to jail it is first and foremost the CEO as when 100% of his expenses are proven to be unacceptable you can easily see the source of the issue. It is likely that some of the board were right there with him. They can sit in jail beside him.